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India, Sri Lanka chart road map to boost ties via energy, infrastructure pacts

LiveMint logoLiveMint 30-04-2017 Elizabeth Roche

New Delhi: India has drawn up a plan for long-term economic cooperation with Sri Lanka in the face of increasing Chinese influence in the island nation that New Delhi has traditionally considered within its sphere of influence.

The plans include the construction of a gas-based power plant and a solar power plant besides a slew of road and railway projects.

The preliminary road map or a memorandum of understanding for economic cooperation was signed by the two governments last week during a visit by Sri Lankan Prime Minister Ranil Wickremesinghe to New Delhi.

“There are traditionally close and friendly relations between the two countries and also continuing endeavours to enhance bilateral relations through increased economic, investment and development cooperation,” foreign ministry spokesman Gopal Baglay told reporters after the Wickremesinghe-Modi talks in New Delhi.

“The (Modi) government is internally focused on ‘Sabka Sath Sabka Vikas’ (development for all) and externally too in the neighbourhood, our vision to promote connectivity and development takes ‘Sabka Saath Sabka Vikas’ to our external environment, and naturally to the neighbourhood first. In this backdrop, with the objective to achieve greater economic, investment and development cooperation in a progressive manner....the two governments signed this Memorandum of Understanding on Cooperation in Economic Projects,” Baglay said.

The main elements of the road map include the construction of a regasified liquefied natural gas (LNG) fired 500-mega watt (MW) capacity power plant, an LNG terminal and floating storage regasification unit (FSRU) in Colombo, a 50-MW solar power unit in Sampur, the creation of industrial zones or special economic zones in identified locations in Sri Lanka, road connectivity, railway track upgradation and purchase of rolling stock and a container terminal in Colombo Port as a joint venture.

Besides, India and Sri Lanka will jointly develop the Trincomalee oil storage tank farm. Under the terms of the 1987 India-Sri Lanka accord, the two countries have agreed to jointly develop the 99 oil tanks housed in Trincomalee, a relic from the colonial times. At present, Indian Oil Corporation subsidiary Lanka IOC runs 15 out of the 99 storage tanks in Trincomalee. The proposed joint venture pertains to the remaining 84 tanks with Sri Lanka proposing to retain 10 of those for use by its Ceylon Petroleum Corporation.

According to Baglay, India and Sri Lanka are to draw up plans for “a port, petroleum refinery and other industries in Trincomalee, for which a joint working group will be set up to further discuss and flesh out details.”

All these plans by India come as China looks to increase its footprint in Sri Lanka as part of its plans for the “One Belt One Road” initiative—an ambitious project of expanding links through roads, railways and ports between Asia, Africa and Europe underpinned by billions of dollars in infrastructure investment.

China has already developed the Hambantota port and its submarines have been making port calls in Sri Lanka—worrying India.

In a bid to reinforce the cultural and traditional connect between India and Sri Lanka, Indian prime minister Narendra Modi will travel to the island nation next month.

“I feel fortunate that the occasion of the great festival of Buddha Purnima is celebrated as Vesak Day by the United Nations. This year, it will take place in Sri Lanka. On this holy event, I shall get an opportunity to pay tributes to Lord Buddha in Sri Lanka. It will be an opportune moment to re-visit his ideals,” Modi said in his monthly radio address to the nation on Sunday.

“When we say Sabka Saath, Sabka Vikas, it is not limited to the confines of India. It applies to the global context too. And very specially to our neighbouring countries,” Modi said – underlining his Neighbourhood First foreign policy unveiled in May 2014.

“Prime Minister Narendra Modi’s ‘neighbourhood first’ approach has not turned out how he had envisioned,” said former foreign secretary Lalit Mansingh. Given the subsequent hiccups in the policy—a deterioration of ties with Pakistan and strains in India-Nepal ties for instance—Modi seems to be looking at a “new framework of ties” with India’s neighbours with the aim of countering Chinese influence, Mansingh said. “This new formula includes an element of strong economic cooperation which is what we are seeing play out right now,” he said.

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